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TMI Blog2007 (3) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... of appeal. The concise grounds of appeal are, therefore, accepted. These are reproduced below for ready reference: "1. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in holding that the loss incurred on sale of industrial building (galas) of Rs. 66,65,600 as short-term capital loss, on applying the provisions of s. 50 as against business loss claimed by the appellant. 2. The learned CIT(A), before holding the loss as short-term capital loss, ought to have considered the following facts: (a) The industrial building is disclosed separately in balance sheet as capital work-in-progress following AS 2 and AS 7 of ICAI. (b) That industrial building (gala) is a partly self-constructed asset intended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, the assessee claimed that the loss on sale attributable to the same was concerned, it was required to be treated as business loss. It was submitted by the assessee that the assessee had tried to sell such industrial units in the earlier years and has received the advance payments from various parties towards allotment of industrial galas in such building which was treated as stock-in-trade. It was also pointed out that the advances so received were duly disclosed in the audited year end financial statements, as well as tax audit report, as 'advances accepted under the consumer scheme' Copies of these documents were filed before the AO. It was also pointed out that because of various problems such as infrastructure support, proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the nature of stock-in-trade The AO also observed that since it was only capital work-in-progress, the depreciation was not anyway admissible on the same. The AO thus indicated that not claiming the depreciation on this asset does not establish that the same was in the nature of trading asset. It was in this backdrop that the AO declined assessee's claim to the effect that loss on sale of this building should be treated as business loss. The AO, accordingly, computed the loss as 'short-term capital loss'. Aggrieved by the action of the AO, assessee carried the matter in appeal before the CIT(A) but without any success. The assessee's request for admission of additional evidence, to establish factual aspects embedded in his contentions, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osits were for the purposes of sale of galas, it is clear that "all these persons have given money to the assessee for the purpose other than construction of galas". One can understand a finding about purpose of a deposit but it is indeed difficult to fathom as to how does he conclude, without examining these persons, without any findings about the nature of deposits placed under the consumer scheme, without even bothering to collect even elementary details about the transactions, that the monies so given to the assessee are "for the purpose other than construction of galas". We have also noticed that no show cause or requisition was issued to the assessee before jumping on this conclusion and thus the assessee had no opportunity to clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set. Whether this business asset is sold in the form in which the assessee originally intended, or in any other form, would not affect the nature of profits or losses on such transactions. As regards the Revenue's stand that the land and building was shown in the fixed assets, it is not really relevant. When its being taken out of the depreciable assets and construction activity is carried out on the same, with the intention to sell its units and advances are also received for that purpose, it cannot be said that it was used as a fixed asset of the business. As regards CIT(A)'s observation that it was a case of a business never coming into existence, we are unable to subscribe to this view either. In the present case, the assessee started a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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